Equal opportunity rule vs. market rule in transfer of control: How can private benefits help to provide an answer?

Abstract

To cite this version:Hubert Having been introduced in the European Union and in many other countries, the equal opportunity rule is seen as protecting investors in the event of a transfer of control. This rule should be analyzed in a context of appropriation of private benefits between the new controlling shareholders and the outside investors. Both parties need to design a new implicit contract to share the firm's ownership. Using a signaling model, we show that the new controlling shareholder issues signals to outside shareholders to deliver private information on a firm's future economic return and her private rate of appropriation. The ownership stake of the controlling shareholder and the premium embedded in the acquisition price are key parameters. In a controlling ownership system, the equal opportunity rule modifies the relative behavior of controlling and outside shareholders. The quality of information deteriorates but the discipline on appropriation may become stronger.

Tomas de control en el mundo y beneficios privados del control bajo las distintas regulaciones vigentes

“…La controversia entre la EOR y la MR ha experimentado un renacimiento en los últimos años, iniciada principalmente por la experiencia de la Unión Europea tras el cambio a la EOR en 2004(De la Bruslerie, 2013. Han aparecido argumentos en contra (Papadopoulus, 2007(Papadopoulus, , 2013Sepe, 2010;y Enriques, 2012) y a favor (McCahery y Vermeulen, 2010;Schuster, 2010Schuster, , 2013.…”